10 F. 280 -

10 F1d 280

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Case Text

280

PEDERAL REPORTER.

wife five or six years before bankruptcy, and that he has borrowed money, giving the stock as collateral security. He swears that the transfers were made bona fide, and no proof is brought forward to contradict him. Such conveyances, made long before bankruptcy, and in the absence of concealment, are no gronnd for withholding a discharge. In re Murdock, 8 N. B.R.146; 1 Low. 862. There seems to have been nothing irregular in the sale of the other stocks mentioned, or in the disposition of the proceeds. The ownership of any horses is denied, but the 'bankrupt admits having an old carriage or two in the stable. This latter omission is hardly of such a serious character as to affect the discharge. Had these bankrupts intended to have defrauded their creditors it is more than probable that their estat& would have yielded a smaller percentage of their indebtedness, and when in addition to this we find that the only evidence brought forward by the opposing creditors is the examination of the bankrupts before the register, anJ that no witness is produced to show any facts tending to contradict them. The court should be clearly satisfied, upon the proof submitted, of the violation of the provisions of the bankrupt act set out in the specifications before withholding a discharge. In rt Burgess, 3 N. B. R. 196. Weare not so satisfied, and therefore a discharge is granted ill each case.

BANKRUPTCy-TITLE OF ASSIGNEE-SUIT TO RECOVER INTEREST OF BANKRUJ"J' ON PROPERTY TRANSFERRED IN FRAUD.

The bankrupt act vests the assignee with the title to all property conveyed by the bankrupt in fraud of creditors; and he may proceed to recover the interest of the bankrupt in such property, whether any l.:reditQl W&i i.n II. pQsition to attack the transfer or not.

In Bankruptcy. Austin G. Fox, for plaintiff. Abbott Brothers, for defendants. WALLAOE, D. J. Separate demurrers are interposed by the de. fendants Matthews and wife, and the defendant Murchison, to the bill of complaint. The complainant is the assignee in bankruptcy of Ma.tthews, and the bill is framed with the object of reaching the illteresi

PLATT V. MATTHEWS.

281

of the hankrnpt in certain mortgage bonds of the Carolina Central Hailroad Company, which were transferred by the bankrupt to his wife, as is alleged, in fraud of creditors, and which were thereafter pledged to several of the parties defendant, including Murchison, as collateral to loans to Mrs. Matthews. As the bill does not allege that the transfers from Matthews to his wife were in contravention of the bankrupt act, but proceeds upon the theory that they were fraudulent as to creditors, and omits to aver that any creditors of Matthews ever obtained a judgment, or were b a position to assert So lien upon the property transferred or a right to have the property applied to satisfy any lien they might perfect, the point is taken that the assignee cannot maintain the action. If the assignee has no other right to follow the property than was possessed by Matthews' creditors at the time of the bankruptcy proceeding, this position is undoubtedly correct, because it is clear that creditors at large cannot assail a fraudulent transfer of property by their debtor; they must put themselves in a position to perfect a lien therein by a judgment and execution, so as to subject the property to the satisfaction of the lien when the obstacle of the fraudulent transfer is removed. But the difficulty with this position is that the bankrupt act vests the assignee with the title of all property conveyed by the bankrupt in fraud of creditors, and the assignee acquires his rights by the act itself, and not through what has been done by the creditors. Bya statute of this state, also, an assignee or other trustee of the property of an individual may, for the benefit of creditors, disaffirm and .treat as void all transfers in fraud of the rights of any creditor, (Laws 1858, c. 314,) and it has been decided that under this statute an assignee in bankruptcy may maintain an action at law to recover the proceeds of property so transferred. Southa1'd v. Benson, 72 N. Y. 434. In that case the precise question involved here was discussed, and it was determined that under the bankrupt act property so transferred is vested in the assignee by the express terms of the act, and that he represents the creditors' rights without the technical obstructions to the enforcement of these rights by a cred- , itor at large. The same conclusion was reached in the circuit court of this district by Judge Woodruff, in Re Leland, 10 Blatchf. 503. Re Collims, 12 Blatch£. 548, contains expressions indicating a different view. But in both these cases the transfer attacked was not alleged to be fraudulent, but was a chattel mortgage, which was void by statute as against creditors, because not filed as the law required. As was held in Stewart v. Platt, 101 U. S. 731, such a failure to file a chattel

282

FEDERAL REPORTER.

mortgage could not be taken advantage of by the assignee, because it did not render the mortgage void as to creditors at large, but only to such creditors as had judgments; as between mortgagor and morttook gagee it was a valid lien upon the property, and the the property subject to the lien. Where there is fraud the assignee can contest the lien on the title of the vendee, although the bankrupt could not. Where there is no fraud he cannot assail the transaction unless it contravenes the bankrupt act, but acquires simply the rights of the bankrupt. Numerous other authorities might be cited to sustain the position that an assignee may proceed to recover property transferred in fraud of creditors whether any creditor was in a position to littitck. the transfer or not, and that his title accrues by force of the· act, and not through the rights of the creditor to assert the fraud. See authorities collected in Re Duncan, ] 4 N. B. R. 33. The other objections to the bill presented by the demurrer are not meritorious. The action is not for an accounting, nor does it assail the title of Murchison as a pledgee of the bonds. The bill seeks to reach only the interest in the bonds which would belong to Mrs. Matthews if the transfer to her had not been fraudulent, and in this behalf asks a recovery of Murchison as to ihe amount due him as pledgee, and an account of the proceeds in case of a sale. A tender of the amount due to the pledgees was not prerequisite to the relief asked. The bonds pledged to Murchison are identified by the num· bers, in connection with the general allegations of the bill, as part of those originally owned by Matthews. The demurrer is overruled.

ATWOOD

v.

THE

CO.

283

ATWOOD

v.

THE PORTLAND COMPANY.

(Circuit Uourt, D. Maine.

July 6, 1880.)

1.

PATENT-BUIT FOR AN ACCOUNTING.

A suit in equity for an accounting may be maintained without demanding an injunction.
2.

SAME-JURISDICTION-IN.JUNCTION.

Circuit courts have" original cognizance, as well in equity as at. law,ot all actions, suits, and controversies" arising under the patent laws i and their power to grant an injunction is a mere incident.

a.

REISSUE-VOID ACTS OF COMMISSIONER.

In case of a reissue of a patent the patentee may claim something which he had before described as one mode of making his machine or article, when he is informed of its importance. A reissue which was first in time cannot be affected by subsequent void acts of the

this bill upon the reissued patent granted him in 1857, No. 46S, for a cast·iron car wheel. The original patent was granted in 1847; there was an extension of the reissued patent in 1861; and this suit was brought nearly six years after -the end of the extended term; but the statute of limitations is not relied on at this stage of the case. The defendants contend that a suit in equity cannot be maintained, because no injunction can now be issued, and they consider the account to be a mere incident to the injunction. In my opinion the account is no more incident to the injunction than the reverse. In Eureka Co. v. Bailey Co. 11 Wall. 488, which was an appeal from my decision, So bill was sustained for an account of royalties due by a contract concerning a patent; but the suit was not a patent suit, and an injunction against the use of the plaintiff's invention was asked and issued as incident to the accounting,-that is to say, until the defendants should pay the royalties. A similar case is Magic Rutfie 00. v. Elm City Co. 11 O. G. 501, 13 Blatohf. 151, where the bill was sustained for an account under a contract relating to a patent, but without injunction, the patent having expired. Bills have been upheld and decrees rendered for an account, when the patent had expired during the progress of the Clause, in Jordan v. Dobson, 2 Abb. (D. S.) 398; Sickles v. Gloucester Manuf'g Co. 1 Fish. 222,3 Wall. Jr. 196, 4 Blatchf. 229, note; Imlay v. Nor. a: Wor. R. Co. 4 Blatchf. 227; Neilson v. Betts, L. R. 5 H. of L. 1; Seymour v. I1farsh, 6 Fish. 115, affirmed, n7 U. S. 348. In this last case the point was